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No NAFTA deal will be reached by Thursday’s U.S. deadline, Canada and Mexico say

WASHINGTON — No North American Free Trade Agreement deal will be reached by the Thursday deadline imposed by a top U.S. legislator, a Canadian government source and Mexico’s economy secretary said on Wednesday.

U.S. House Speaker Paul Ryan says a NAFTA deal would have to be made by Thursday in order for this Congress, which is controlled by trade-friendly Republicans, to hold a vote by the end of the year.

Canada's Foreign Minister Chrystia Freeland accompanied by Peruvian Foreign Minister Nestor Popolizio, left, Mexican Foreign Minister Luis Videgaray, Mexican Economy Minister Jose Antonio Gonzalez and Argentine Foreign Minister Jorge Faurie, talks to reporters after a "Lima Group" in Mexico City on May 14, 2018. The Lima Group of 14 countries is seeking a peaceful solution to the spiralling crisis in Venezuela. Freeland is also taking part in NAFTA negotiations with recent talks focused on the trade rules governing auto manufacturing. By Wednesday it appeared those talks had stalled. (ALFREDO ESTRELLA / AFP/GETTY IMAGES)

The Canadian source said there will be no deal of any kind by Thursday, even a partial “agreement in principle.”

Mexican economy secretary Ildefonso Guajardo also said there will not be a deal by Thursday. Jerry Dias, president of the Unifor union that represents Canadian auto workers, said “there’s a better chance of me beating Usain Bolt in a sprint than this thing being done tomorrow.”

The apparent inability to make an immediate deal does not mean the negotiations have failed for good: talks can continue indefinitely, and Guajardo said he would not rule out a deal by June. But it is possible that there will soon be a prolonged delay because of the Mexican presidential election in July and the U.S. congressional midterm elections in November.

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The Canadian government does not appear to be in any rush for a deal. Though the Bank of Canada has said that trade uncertainty is already reducing investment in Canada, government officials and trade experts have argued that a bad deal would cause more long-term harm than a prolonged holdout for a better deal.

“All along we have said that it is important to reach a deal quickly. It’s important to provide that stability and predictability to industry and workers in all three countries. We recognize that need. However, we are not going to be rushed into a deal that we’re not happy with just based on that,” said the Canadian source, who was granted anonymity to speak candidly about the state of the negotiations.

Adam Austen, press secretary for Foreign Affairs Minister Chrystia Freeland, said “the process of congressional ratification is internal to the U.S.,” not a matter for Canada. Austen said the three countries have made “good progress” during this spring’s “intensive phase” of talks, “particularly on auto rules of origin.”

“We still want to see something happen and we're going to continue in those conversations — they're ongoing now — and we're pushing forward and hopeful that we can get something done soon,” Sarah Sanders, press secretary for U.S. President Donald Trump, told Fox News.

The absence of a rapid deal means Canada’s steel and aluminum industry will continue to face a tariff threat. Trump has exempted Canada from his tariffs only until June 1, and Commerce Secretary Wilbur Ross said Tuesday that Trump’s decision on whether to extend the exemption will be based on the state of NAFTA talks.

Any prolonged break could increase the possibility of a Trump tantrum that could transform the negotiations or produce a U.S. withdrawal from the existing NAFTA the president calls a “horrible disaster.” Trump lashed out at Mexico on Wednesday, saying “they do nothing for us,” and he has periodically continued to threaten to trigger the NAFTA withdrawal process.

“I’m hopeful that there’s a pause. My concern is that there’s frustration in some quarters that there is not a deal and that the pause turns into a withdrawal letter,” said Robert Fisher, a U.S. negotiator in the original NAFTA talks and now managing director of Washington trade consulting firm Hills and Co.

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The apparent failure to hit Ryan’s deadline does not come as a surprise to trade experts, who have long thought an immediate agreement was unlikely given how far apart the three countries have been on key proposals from the Trump administration.

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